Commerce Commission updates Cartel Leniency and Immunity Policy

26 February 2024

The Commerce Commission has released an updated Cartel Leniency and Immunity Policy and Template Leniency Agreement which removes the option for a person to seek criminal immunity and/or civil leniency for a ‘naked’ cartel attempt.

Such options will no longer be available for where there has been an attempt (or series of attempts) to engage in cartel conduct (for example inviting another person to form a cartel) that does not result in actual cartel arrangement, bringing the policy in line with other jurisdictions.  

Cartel conduct involves two or more competitors agreeing to fix prices, allocate markets or customers, or restrict the output of goods or services. The Commerce Act provides for substantial financial penalties against companies and individuals who engage, or attempt to engage, in cartel conduct, or aid and abet cartel conduct. Cartel conduct is now also punishable with a jail term for offending individuals of up to seven years.

The Cartel Leniency and Immunity Policy is a key tool in the Commission’s arsenal for the enforcement of cartel conduct in New Zealand. Criminal immunity and/ or civil leniency can be available for the first eligible cartel participant to notify the Commission of the existence of cartel conduct that it is not aware of, if the applicant provides valuable evidence that the Commission could not have obtained elsewhere. The Commission last revised the policy in 2021 to reflect the introduction of the criminal cartel offence.

The key change in the latest update brings New Zealand in line with the international community, including Australia, where the Australian Competition and Consumer Commission (ACCC) similarly does not grant immunity to applicants who have unilaterally attempted to cause others to engage in cartel conduct. The rationale appears to be avoiding potential misuse of Commission resources in circumstances where the only party at risk of breaching the cartel prohibition is the one seeking leniency. However, the New Zealand position remains that where an applicant has attempted to engage in cartel conduct, they will be eligible for immunity and/or leniency if they meet all of the conditions and are able to provide material assistance in proceedings or a prosecution against another party, for example, where an applicant’s attempts to engage in a cartel are part of a broader set of conduct which does include a cartel agreement(s).

The revised policy also now expressly incorporates the key extracts of the Solicitor-General’s Prosecution Guidelines (read in conjunction with the Guidelines on Immunity from Prosecution for Cartel Offences). While not a change in the substance of the policy, these express references serve as a useful reminder that while there is an expectation that leniency for civil conduct would also result in immunity from criminal prosecution, the criteria for each of those are different.

These updates were issued within two months of the Commission filing its first criminal charges for alleged cartel conduct (see Bell Gully’s update here). The prosecution sends a strong message that the Commerce Commission will not tolerate cartel conduct, and is prepared to lay criminal charges to enforce the law. Coincidentally, the updates also came on the same day as the Australian Federal Court handed down criminal convictions and prison sentences to individuals for cartel conduct.

If you have any questions about the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.